Reverse charge-urgent

This query is : Resolved

Narender Singh (Querist)
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27 January 2014 We are Pvt Ltd company take rent a cab for official tour, now my query is:
take a example of two bill

Bill issued by service provider to us

case 1 Rent a cab service 1000.00
ST@4.94% 49.40
Total 1049.40

As per notification number 30/2012 how much amt we(company) have to pay to service tax deptt.?

@VaibhavJ

@VaibhavJ (Expert)
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27 January 2014 Hi

40% by Service receiver & balance / nil by SP.

Thanks

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AVTAR SINGH

AVTAR SINGH (Expert)
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27 January 2014 You will have to pay 100% of Rs.49.40 to the service tax deptt under reverse charge. as the intention of the Service Provider is not to avail cenvat credit.

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Narender Singh

Narender Singh (Querist)
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27 January 2014 sir thanks for ur prompt response
but i wants to know that 40% directly payable to service provider or govt?

if to directly to govt then shall we deduct from service provider bill?

AVTAR SINGH

AVTAR SINGH (Expert)
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27 January 2014 Yes. You are not supposed to make this payment to Service Provider. Deposit Service Tax amount directly with the Service Tax Department.

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Narender Singh

Narender Singh (Querist)
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27 January 2014 thanks Avtar ji but by deducting from service provider bill ? or we give to service provider whole rs 1049.4(ignore TDS) and another Rs.49.4 to ST deptt.?

@VaibhavJ

@VaibhavJ (Expert)
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27 January 2014 Hi

Pl note you will have to pay ST mentioned on bill (to Service Provider i.e. 60%) + 40% of ST from your packet to service tax dept. directly.

You need not required to TDS on ST charged by SP.

Thx

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Narender Singh

Narender Singh (Querist)
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27 January 2014 Thanks Vaibhav ji and avtar ji

Following is the status of bill:-
Gross amount 1000.00
ST@4.940% 49.40
Total 1049.40

Now as per @Vaibhav ji ans we pay service provider Rs.1049.40(Pls Ignore TDS) and 49.40 to ST Deptt.(from company pocket)

but as per Avtarji ans
we should pay Rs.1000 to service provider and 49.40 to ST Deptt.

what is the right solution?

Narender Singh

Narender Singh (Querist)
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AVTAR SINGH

AVTAR SINGH (Expert)
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27 January 2014 On the basis of the figures of the bill provided by you, pay Rs.49.40 to the Service tax department. Pay Rs.1000-10=990(after deducting TDS) to the service provider. Deposit TDS Rs.10 with TDS department. The service provider is claiming abatement of 60% and not claiming Cenvat that's why he has charged 40% of service tax.

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CA Deven

CA Deven (Expert)
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27 January 2014 Hi Vaibhav can you please clear your point because what you are saying and what avtar is saying is totally different.

@VaibhavJ

@VaibhavJ (Expert)
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27 January 2014 Hi

Pl note in your example service provider should have charged as follow:

1000 + 74.16 i.e.ST @ 60% of of 12.36% of ST liability.

Since in your case its is charged @ 40% which is wrong.

When you receive invoice from SP you need to check whether RCM is applicable or not, if yes then check that only ST is charged by SP for his own liability i.e. 60% of 12.36%.

Now while making payment to service provider you have to make him full payment of ST & deduct TDS on Basic Invoice Value.

Over & above this you will be required to make payment @ 40% of 12.36% of your ST liability on Basic value directly to govt under RCM.

Thx

AVTAR SINGH

AVTAR SINGH (Expert)
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27 January 2014 As per Notification 26/2012 regarding abatement, the service tax @40% is to be charged in case of Renting of any motor vehicle designed to carry passengers if the CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 by the service provider. In my opinion, the service tax @40% has been rightly charged and the same is to be deposited with the service tax department by the service receiver. The net payment after deduction of service tax and TDS is to be made to service provider.

@VaibhavJ

@VaibhavJ (Expert)
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27 January 2014 Dear Avtar Ji

Answer given by me is keeping RCM under focus as questioned by Author.

I do agree with ans given by you in light of abatement.

Thx

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